Ukraine: Kyiv Tax Newsletter - December 2017

Last Updated: 2 January 2018
Article by Igor Davydenko and Tetiana Gryn

Minimum subsistence income and minimum wage

On 7 December 2017, the Supreme Council adopted the Law On the 2018 State Budget of Ukraine, No. 1801-VIII (hereinafter referred to as the "State Budget Law"). The State Budget Law introduces a new minimum subsistence income and minimum wage, which are to enter into full force and effect from 1 January 2018:

  • The minimum subsistence income is determined as follows: from 1 January 2018 – UAH 1,700.00, from 1 July — UAH 1,777.00, and from 1 December — UAH 1,853.00
  • The minimum subsistence income for employable individuals is determined as follows: from 1 January 2018 – UAH 1,762.00, from 1 July – UAH 1,841.00, and from 1 December – UAH 1,921.00
  • The minimum wage is set at the following level: from 1 January 2017 – UAH 3,723.00; on the "per hour" basis: UAH 22.41.

Amendments to the tax code

On 7 December 2017, the Supreme Council adopted Draft Bill No. 6776-d dated 14.11.2017 On Introduction of Amendments into the Tax Code of Ukraine for the purpose of ensuring the budget proceeds balance in 2018 (hereinafter referred to as the "Amendments to the Tax Code"). The Law introduces such innovations:

Definitions

  • Innovations were introduced into the definition (criteria) of big tax payers
  • The notion of "new well" was introduced for the purpose of correct application of the specific rent for production of natural gas
  • Introduction of a more precise definition of related parties for the purposes of transfer price formation
  • Supplements were introduced into the list of payments, which are not deemed a royalty; specifically, the following payment was introduced: payment due for transfer of the right for distribution of copies of intellectual property objects, without the right to their reproduction
  • Definition of "syndicated financial credit" was introduced.

The list of controlled transactions was extended

  • The controlled transactions were supplemented with a new subsection "ґ", which includes "business transactions, which are carried out between a non-resident and its permanent representative office in Ukraine."

Administration

  • A 60-day period under review was introduced for filing the annual corporate profit tax declaration by companies
  • Payers of the single tax were released from payment of advance installment in the instances when dividends are subject to payment
  • Accounting rules were established with respect to non-principal place of tax registration of a big tax payer and such accounting rules are pertaining to taxable objects of such tax payer
  • Taxation rules for the withholding tax accruing on interests due under syndicated loan were determined in the instances, when Ukraine's international treaties are subject to application
  • Liability was established – in the form of striking off the Register – for religious organizations. The liability arises if requirements governing incorporation, registration and utilization of derived incomes (profits) are violated
  • It was determined as follows: for religious organizations, it is sufficient to comply only with the requirement related to incorporation and registration that must be conducted pursuant to the procedure established by the laws governing operations of relevant non-profit-making organization.

VAT

  • The introduced supplement included the provisions whereby registration of VAT invoice/calculation of adjustment in the Unified Register of VAT Invoices may be suspended subject to the procedure and grounds determined by the Cabinet of Ministers of Ukraine
  • It was proposed to extend application of the VAT rate amounting to 7%, to the import and supply to the customs territory of Ukraine, of all medical products, which are entered into the State Register of Medical Devices and Products with Medical Designation
  • Benefits were established in the instances, when the equipment classified according to the defined goods' subcategories in accordance with Ukrainian Classifier of Goods of Foreign Economic Activity, is imported into the customs territory of Ukraine pursuant to the import customs regime (before 1 January 2020): instalments (payments in equal parts) are introduced for payment of value-added tax during the period of time, which is not exceeding 24 calendar months.

Other innovations

  • A restriction was introduced: it relates to the import into the customs territory of Ukraine, of the goods, whose total actual value does not exceed the equivalent of €150, in unaccompanied shipments
  • The requirement regarding the necessity to comply with "not low" tax non-resident's status in connection with placement of Eurobonds was excluded
  • Approach to registration, for the profit tax purposes, of recording results for the bank's reserves and re-calculation of such reserves, was amended
  • It was proposed to introduce more precise definitions in the existing regulations in order to have a clear possibility to audit the transfer price formation transactions conducted in 2013-2014
  • Excise and environmental duties rates were changed.

Rental payments

  • It is proposed to reduce the rental payment rate from 45% down to 29% and from 21% down to 14%, to ensure that they are equated with the natural gas and oil rent rates. Date of entry into full force and effect: 01.01.2019
  • It is proposed to determine an individual rate for gas rent attributable to new wells. Date of entry into full force and effect: 01.01.2019:
    • Natural gas mined from new wells, horizons which are fully or partially hosted at a depth of up to 5000 meters (except for the natural gas mined during performance of joint activities agreements) -12%
    • Natural gas mined from new wells, horizons which are fully or partially hosted at a depth exceeding 5000 meters (except for the natural gas mined during performance of joint activities agreements) – 6%.

The aforesaid amendments have been prepared on the basis of a comparative table compiled for the second reading of the Draft Bill "Amendments into the Tax Code".

It should be pointed out that on 8 December 2017, the Draft Decree was registered, seeking reversal of the resolution of the Supreme Council of Ukraine dated 07.12.2017 regarding approval, in totality, as a law of the Draft Bill "Amendments into the Tax Code of Ukraine for the purpose of ensuring the budget proceeds balance in 2018" (Draft Bill "Amendments into the Tax Code").

The final list and status of amendments will be provided after their official publication of the text of the Law.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
22 Jan 2019, Other, Luxembourg, Luxembourg

The second event in the Dentons «Women LEAD» (Leadership, Entrepreneurism, Advancement, Development) series in Luxembourg will take place on January 22, 2019.

22 Jan 2019, Briefing, London, UK

The UK government has pledged to deepen economic and trade ties with growing African economies ahead of Brexit, with a desire to overtake the US to become the G7's biggest investor in Africa by 2022.

25 Jan 2019, Other, Amsterdam, Netherlands

Dentons’ Debates ask one basic question: What role can law firms, lawyers, and the private sector in general, play in promoting social change?

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions